The Federal Reserve is steering through one of the most challenging policy environments in years as the war with Iran destabilizes global energy markets and raises uncertainty about inflation and economic activity. The spike in geopolitical volatility leaves policymakers navigating an exceptionally narrow path: tightening too aggressively risks tipping the economy into recession, while easing too soon could reignite inflation. For the near term, the least worst option is to sit tight and leave rates unchanged until the incoming data start to make a strong case for changing the monetary policy bias.
Prolonged Stress Test Lurks for Global Markets as War Continues
Global markets are entering a sixth week of stress testing as the war with Iran continues with no immediate resolution in sight. The main risk factor remains the closure, or near‑closure, of the Strait of Hormuz, a strategic chokepoint through which roughly one‑fifth of global oil and liquefied natural gas flowed before the conflict began on Feb. 28.
Book Bits: 04 April 2026
● Recession: The Real Reasons Economies Shrink and What to Do About It
Tyler Goodspeed
Interview with author via CNBC
Q: You say recessions are unforecastable. What does that mean? There are a lot of people who try to predict them.
A: In a nutshell, it means recessions are about shocks, and they are shocks we can neither fully anticipate nor effectively hedge against. We have tools to predict recessions, like the yield curve. But when you actually test these tools on the historical record, there are a lot of false positives and false negatives. I’ll admit, I still look at the yield curve just to take a look. I’m not a believer in astrology, but I still take a peek at my horoscope now and then.
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Total Return Forecasts: Major Asset Classes | 2 April 2026
The war with Iran started over a month ago, and could run for several more weeks, according to President Trump’s address to the nation last night. The short-term effects for markets have already been substantial, and more turbulence is potentially brewing for the near-term outlook. But even a month of war has yet to meaningfully change long-term expected returns for the major asset classes overall.
Major Asset Classes | March 2026 | Performance Review
Markets took a beating in March, thanks to the war with Iran. Commodities surged and cash edged higher, but the rest of the major asset classes fell, in some cases sharply, based on a set of proxy ETFs.
Bond Market Starting To Push Back On Powell’s Inflation View
Federal Reserve Chairman Jerome Powell may be downplaying inflation risks, but the bond market is signaling skepticism about how quickly price pressures will recede.
US Q1 GDP May Improve As War Threatens the Outlook
US economic growth in the first quarter is still expected to rebound from the sluggish rise in Q4, but macro storm clouds are gathering for Q2 as the war in Iran continues.
Book Bits: 28 March 2026
● The Great Global Transformation: The United States, China, and the Remaking of the World Economic Order
Branko Milanovic
Review via Compact
According to Milanović, our decaying neoliberal order is so globalized and over-extended that it has coiled back in on itself, leaving us to commodify even our own leisure time by becoming increasingly incapable of enjoying it if it is not shared and displayed through social media… he sees little prospect of “re-embedding” market institutions in renewed social democracies and welfare states. While he sees neoliberal globalization coming to an end, he expects this process to crumble back into what he calls “national market liberalism”: neoliberal institutions confined to nations in which the balance between state and market remains tilted in favor of market elites.
Research Review | 27 March 2026 | Crash Risk
After the AI Crash: Bubble Burst or an Economy-Wide Crash?
Asad Ramzanali (Vanderbilt Policy Accelerator/Vanderbilt U.)
March 2026
Public concern about the level of AI investment is everywhere. While some compare today’s scenario to the dot-com bubble, the economy’s overreliance on AI investment, coupled with opaque financial engineering, means that a market correction could look more like the 2008 Great Recession, an economy-wide crash with systemic consequences. After such a crash, Congress will scramble to identify a reform agenda. In a rush, broader reforms that take time to formulate get shelved for quick action. It doesn’t have to be so. Instead of waiting for the crisis and hastily developing insufficient policies, lawmakers should prepare for this anticipated crisis now. Of course, a response depends on exactly how a crash comes to pass. But for meaningful reforms to have a chance, policymakers need to begin debating them. To that end, this paper describes how a crash might occur and outlines policies for Congress to consider in response.
Markets Are Decoupling Again, Based On Return Correlations
The benefits of diversifying across asset classes as a risk‑management tool are widely accepted, but what’s easily overlooked is that the relative benefits wax and wane over time. That doesn’t invalidate global asset allocation, but it does serve as a reminder that your mileage will vary.